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12/5 Warm-Ups Pass forward 26.2 Pass forward 26.2 1. In which market do firms purchase the factors of production from households? 2. Which market supplies households with goods and services? Bonus Questions- Charlotte is competing with several other major cities for a contract with which industry? (hint, theyre in the transportation business)

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Most missed ?s Why are all goods and services scarce? Why are all goods and services scarce? What is total revenue minus total cost? What is total revenue minus total cost? Who owns factors of production in a market economy? Who owns factors of production in a market economy? Can you have a cost if you dont produce anything? Why? Can you have a cost if you dont produce anything? Why? Why would money flow from firms to households? Why would money flow from firms to households?

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Four Types of Economies chart on p. 225 Objective: to differentiate between the various types of economies through completion of comparison chart. Objective: to differentiate between the various types of economies through completion of comparison chart.

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TYPES OF ECONOMIES Economic system is a an agreed upon procedure within and among communities to organize the production and distribution of goods and service.

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Traditional Economy Definition: Economic system that relies on habit and custom Economic system that relies on habit and custom That is the way we have always done it

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Traditional Economy How are the three economic questions answered? By tradition Growth Not concerned with growth (bartering is used) Who / What influences the economy? Tradition

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Traditional Economy Examples: very isolated tribes Examples: very isolated tribes Amish Who loses power in this type of economy? Political Philosophy and People n/a Does not apply to traditional economies n/a

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Command Economy (Centrally planned) Definition: Central government makes all decision on the production and consumption of goods and services. Central government makes all decision on the production and consumption of goods and services. We do what we are told

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Command Economy How are the three economic questions answered? Whatever the govt. decides is needed at the least cost Growth Slow growth, inefficient Who / What influences the economy? Government has complete control

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Command Economy Examples: Cuba, North Korea, Iran Examples: Cuba, North Korea, Iran 1920-1991 Soviet Union

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Command Economy Who loses power in this type of economy? Political Philosophy and People CitizensCommunism Karl Marx Socialism

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Karl Marx p. 226 Marx was born in Germany in 1818 and died in London in 1883. He was a philosopher and political economist but was known best as a revolutionary communist. Marx along with Friedrich Engels wrote the Communist Manifesto. Marx was born in Germany in 1818 and died in London in 1883. He was a philosopher and political economist but was known best as a revolutionary communist. Marx along with Friedrich Engels wrote the Communist Manifesto.

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Communist Manifesto History should be described as social classes struggling with one another History should be described as social classes struggling with one another 19th Century social classes 19th Century social classes Proletariat those that own very little and therefore must sell labor to the capitalists Proletariat those that own very little and therefore must sell labor to the capitalists Bourgeois (capitalists) the person that owns the factories and buys labor Bourgeois (capitalists) the person that owns the factories and buys labor

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Communist Manifesto (continued) The conflict between these two classes will eventually lead to revolution by the working class (proletariat). With this revolution there would cease to be a struggle. The conflict between these two classes will eventually lead to revolution by the working class (proletariat). With this revolution there would cease to be a struggle. Workers of all lands, unite the final words of the Communist Manifesto Workers of all lands, unite the final words of the Communist Manifesto This document lays out the foundations of communism. This document lays out the foundations of communism.

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Since the collapse of the Soviet Union, few countries would describe themselves as having a Marxist government. Political parties throughout the world still maintain Marxist ideologies. Since the collapse of the Soviet Union, few countries would describe themselves as having a Marxist government. Political parties throughout the world still maintain Marxist ideologies. Despite Marxs predictions, capitalism is still thriving! We still see the existence of a working class and entrepreneurs. Despite Marxs predictions, capitalism is still thriving! We still see the existence of a working class and entrepreneurs.

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Contemporary Communims: Its Status and Future

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Korean Peninsula From Space

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Communism for Kiddies? Smurfs Smurfs Smurfs

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Market Economy Definition: Economic system in which all economic decisions are made by the citizens Make as much as we want

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Market Economy How are the three econ. questions answered? What? most profitable How? least cost method For Whom? Highest bidder Growth Successful and efficient Who / What influences the economy? Citizens Supply and demand Competition Invisible Hand

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Market Economy Examples: Examples: United States, Singapore, Hong Kong

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Market Economy Who loses power in this type of economy? Political Philosophy and People GovernmentCapitalism Adam Smith

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Mixed Economy Definition: Market based economies in which govt. plays a limited role Definition: Market based economies in which govt. plays a limited role All economies of the world are mixed.. There are no true command or completely free market economies

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Mixed Economy How are the three economic questions answered? Govt. and Citizens Growth varies Who / What influences the economy? Part citizen / part govt.

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Mixed Economy Examples: (technically every country is, to a degree, mixed) including: *United States *France *United Kingdom *Canada

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Mixed Economy Who loses power in this type of economy? Political Philosophy and People varies John Maynard Keynes

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Objective: to identify the characteristics of a mixed economy through class notes and discussion Mixed Economies: 229

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Mixed Economies Review.. What are the 3 Economic questions? What goods and services should be produced? How should these goods and services be produced? For whom should these goods and services be produced?

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Mixed Economy COMMAND______________________________MARKET CommunismCapitalism SocialismFree Market Centrally Planned/Controlled Free Enterprise AuthoritarianProfit Enterprise Limited social gain Individual preference of jobs Government directed Progress is stressed Factors of production govt ownedHigh self-gain No self-interest or competitionCompetition Material rewards GOVT CONTROL FREEDOM North Korea ChinaFrance US Singapore Cuba

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Mixed Economy - Most contemporary economies are a blend of market with some government interference Remember..What does laissez- faire mean????

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Mixed Economy - There IS a need for certain government interference because some needs and wants of society are difficult to address in the market place (Could the market place provide for national defense or a highway system??) - There IS a need for certain government interference because some needs and wants of society are difficult to address in the market place (Could the market place provide for national defense or a highway system??)

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Mixed Economy - Some needs that markets could meet fall to the government so that ALL members of society can participate (i.e. education) - Governments create laws to protect property rights and enforce contracts (Why would someone develop a new product if they couldnt patent the product?)

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Mixed Economies - Societies must look at whether their goals could be better addressed by an open market or government action and look at the opportunity cost for each action (Are you willing to pay taxes to fund an army?? Give all people an education??)

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Mixed Economies Circular Flow Diagram Remember the circular flow diagram we looked at in Goal 7??? Remember the circular flow diagram we looked at in Goal 7??? What were the two different markets in this flow? What were the two different markets in this flow? Who were the two major players in this flow? Who were the two major players in this flow?

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Market Economy Circular Flow monetary flow physical flow monetary flow physical flow Circular Flow Diagram of a Market Economy Households Firms Product Market Factor Market Firms supply households with goods and services. Households supply firms with land, labor, and capital Households pay firms for goods and services. Firms pay households for land, labor, and capital.

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Mixed Economies Circular Flow Diagram Adding the government. -Governments purchase land, labor, and capital from households in the factor market -Governments purchase goods and services in the product market (buildings, office supplies, phones, computers, etc.) -Governments provide goods and services by combining resources through the product market (i.e. roads) -Governments collect taxes from both households and businesses

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Mixed Economies Circular Flow Diagram monetary flow physical flow monetary flow physical flow Circular Flow Diagram of a Mixed Economy Households Firms taxes government purchases government- owned factors taxes Government expenditures

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Mixed Economies Comparing Mixed Economies Free enterprise: economic system characterized by private or corporate ownership of capital goods; investments are determined by private decision rather than state control Transition: a period of change in which an economy moves away from central planning toward a market-based system China

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Mixed Economies Privatized: to make a transition, state firms must sell their businesses to individuals and then allow them to compete with one another in the marketplace THE US HAS A FREE ENTERPRISE SYSTEM!! -Government interferes to provide services, keep order, and promote the general welfare -US law protects private property

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Test Corrections and Homework Write the question and the complete answer (not just the letter) or rewrite the question and answer in a complete sentence. P. 231 reading guide 21.1 and 21.2 P. 231 reading guide 21.1 and 21.2

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Origami Foldable Use the distributed handout as your guide Use the distributed handout as your guide You will need 4 colored pieces of paper You will need 4 colored pieces of paper You will need 3 white pieces of paper You will need 3 white pieces of paper Fold like this 3 times per square TOP Rt top Rt bottom Left top Left bottom Bottom